Italy pays higher yields in bond auctions

Italy was forced to pay higher interest rates yesterday to entice investors to buy a little under €5 billion (Dh24.5 billion) worth of its 5- and 10-year bonds as jitters over Eur-ope\'s debt problems have resurfaced. Investors demanded yields of 5.84 per cent on the 10 year-bonds, compared with 5.24 per cent last month. On the 5-year bonds, Italy paid 4.86 per cent, up from 4.18 per cent. The Treasury raised €4.9 billion, with the demand for both bonds below last month\'s. Concerns over Europe\'s debt crisis have swelled over recent weeks as France goes to the polls, Spain struggles with its debts and Italy acknowledged that it won\'t balance its budget until 2015, instead of 2013 as pledged. Italian Premier Mario Monti, who took office in November as the head of a government of technocrats to confront the debt crisis, said on Thursday that budget cuts with structural reforms alone \"will never deliver growth.\" \"If there is not demand, the reforms are useless and there will be no growth,\" he said. In a joint statement with European Commission President Jose Manuel Barroso, Monti affirmed yesterday that growth must come from \"improving competitiveness and not through higher levels of debt\". Following a meeting in Brussels, the pair said austerity measures need to be paired with \"targeted investments to enhance competitiveness\" while helping to increase consumer demand. Pia Ahrenkilde Hansen, a spokeswoman for Barroso, said that investments should be targeted at areas like green technology, energy or the improvement of broadband networks, which could help growth.